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Tuesday, September 6, 2016

half and half 2 of 3


HALF AND HALF 2
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note: I've taken to using the Zote laundry soap as my bath/hand bar soap.  Cut it is quarters and it is 3.5 ounces a bar verses Ivory generic 3.1 ounce a bar.  Cost is 25 cents each verses 34 cents.  And it smells better.
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Yesterday, we didn’t even talk about the Petro-Dollar.  You know, I know, and Ross Perot knows that the PetroBuck is already on its decline/collapse stage.  The only reason the US didn’t collapse economically like the Soviet Union did after its Peak Oil was because we convinced/connived the House Of Saud to price their oil ( and, at the time that also meant the rest of OPEC also ) in dollars in exchange for military protection.  In effect, from that point onward all the nations that wanted to buy oil had to buy our Treasury Bonds first, and use them as the currency to purchase petroleum ( there is nowhere near enough paper currency to do the same and I would wager that keeping larger bills out of circulation had more to do with keeping cash out of the hands of oil buyers rather than drug dealers ).  In effect, all other nations had to offer real goods to buy our debt.  They weren’t buying our debt because they thought it was a good investment but because it allowed them to trade for middle east oil-the less polluted, less energy intensive to process, sweet light crude.

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Well, that happy little arrangement can only work for so long.  Somewhat because the Saudi’s are running out of oil, but mostly because while the American people are largely ignorant and continue their jingoistic orgasm, the rest of the world has already been put on notice that our military has become largely impotent.  Not important-impotent.  The Saudi’s are already forced to do our previous job of protecting themselves, largely through terrorist support and other clandestine activities, but also by sending boots into other countries.  Why do they need us again?  At this point, they are only paying protection money, hoping to delay their capital from being turned into radioactive glass.  But there are two things that will end that.  Actual protection from another superpower, or their country erupting in revolt ( to include their refinery being destroyed ).  Do you think either one isn’t possible very soon?

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Once no other country needs to buy our debt to buy oil, our dollar becomes instantly worthless.  At most, we continue getting about two million barrels a day from Canada ( Mexico has seem such a drastic reduction in output that they are barely a factor anymore ).  Add that to our domestic five and we are still suddenly seeing less than half the oil we presently use.  I would be worrying about this a LOT more than I’d stress over an EMP or solar flare.  It is guaranteed to happen, whereas losing our grid instantly has a lower probability of occurring.  The timing is, as in all other collapse scenarios, the only question.  Most of the issues with EMP’s could conceivably be attributed mostly to Yuppie Scum Survivalists and their wishful thinking that a debt jubilee is possible.  Losing the Petro-Dollar is a lot closer to reality. 

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The above seems to make a case for inflation.  After all, once fuzzy foreigners no longer get stuck with our inflation, how is our economy going to cope?  Inflation is nothing more than more credit being added to the economy, each dollar being diluted with more.  The government and the central bank LOVE inflation.  We are surely going to get more of it, right?  Such has been my reasoning.  Yet, even there we are going to see a caveat.  Going back to the desire of our central bank to limit the paper currency on hand, in effect forcing other nations to buy our debt if they wanted oil ( which is THE lifeblood of all modern economies and most countries ), there is a huge amount of credit in our system and almost no circulating paper money.  The government doesn’t print much more than replacement levels of currency already in existence.  In the event our banking system and credit infrastructure starts breaking down, that is bad enough.  Everyone buys on credit, from the farmer planting crops to the trucker buying fuel to transport that food.  That would almost be guaranteed to crash our system.  But on top of that, there would not be enough paper currency on hand to facilitate trade anyway ( just as in the medieval economy where there wasn’t enough silver or gold and barter was the only way to pay ).  This might be deflationary.  Not that I would count on it, as our current system is urban population fed by long distance transport, all sustained by oil, but you never know.

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Again, all this would underline the likelihood  of inflation over deflation.  And most likely that is good enough as far as your planning.  When I vacillate between inflation and deflation, what I’m really guessing at is the future utility of cash verses goods.  Not really the same thing.  “Deflation” is really just short hand for “need cash” and “inflation” is just short hand for “trade in cash for tangible items before it becomes worthless”.  With that distinction made, I think our argument makes far more sense.  Should I be “mattress stuffing” or should I be “alpha strategizing”?  Should I be hoarding cash money or should I be buying as much consumer goods as I possibly can?   I was always assuming that goods were far more valuable than paper because paper always, in the end, goes to zero value.  But as I’m looking around me, surrounded by consumables for both before and after the collapse, I can’t help but start to get really nervous.

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You can’t eat gold, nor can you eat currency.  But you also can’t survive in today’s world without some gold or cash.  The county won’t take cases of Top Ramen for property tax ( head on down to Kroger as they are having a great case sale right now.  Peanut butter is a buck a jar in case quantity and Top Ramen $3.50 a case.  No longer the Too Cheap To Care ten cents but as close as it gets these days.  Did you listen the last time I told you Albertson’s had Top Ramen on sale?  It was even cheaper ).  If ALL your spare Trading Units are in tangibles, how safe are you during unemployment or other calamities?  How can you buy fire sales?  More tomorrow.

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18 comments:

  1. Another blog I follow, says Ramen and Peanut Butter mixed up is as good as sex. Can't verify that but it might not be that bad. Says you add about 3 big spoons of pb to the ramen and then add the boiling water. I was hoping someone else would be the first to try it and report back.

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    1. That sounds beyond gross, disgusting or retched.

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    2. sounds like the delicious peanut noodles from asian restaurants. look for recipes on internet.

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    3. Asian-food and delicious are not two words I'd string together. There was a reason they used night soil in their fields. It didn't make the food taste any worse. :)

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  2. Goods are for yourself- fulfill your own needs to the absolute maximum with the goods you will need and use.
    Then, and only then, begin caring about things like trade goods and currency. If you can use a good, so can someone else- that doesn't mean that they will necessarily give you a value equal to what you paid for the good, but something of some lesser value is possible.
    Trade goods are goods beyond any you or your immediate descendants could ever hope or plan to use up (like tobacco for a non-tobacco user).
    You want enough cash, and precious metals after cash, to pay your foreseeable property taxes before you invest in any other sort of trade goods. Cash will inflate away to nothing eventually so don't hold too much of it. Precious metals will always have an overhead cost associated with turning them into usable value, and may risk loss, theft/taxation, or seizure under some circumstances - especially coin and bullion.
    After the precious metal comes the consumable addiction luxury goods of every sort from chocolate and coffee, alcohol and tobacco, illegal drugs, to comfortable shoes and elastic and silk for underwear... The value of such goods is highly speculative and variable as is the risk of holding the goods (what do you want to bet that the good wont be outlawed even if currently legal?)

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    1. Hmm, perhaps outlaw underwear as all the cotton land is turned to consumables? :)

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    2. The petroleum based plastic for underwear could be, if not outlawed totally, made by legislative fiat from new bio-degradable materials so that it falls apart after 3 days usage or 3 months on the shelf. Older elastic that actually lasts multiple months when worn may end up being valuable. Or not.
      The point is that the future luxury goods to use for trade are very very variable. Coffee could be outlawed, or require FDA tax stamps - possession of un-stamped coffee could end up being illegal. Or Cocaine could be legalized loosing half its street value.
      Cash, precious metals, and luxury goods are all very vulnerable to government manipulation in one way or another.
      Don't get more than a minimal base-line (a comfortable amount of times property taxes perhaps) until all the goods you could ever use have been stored away safely.

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    3. Everything is valuable to government manipulation. I'm only urging caution on focusing on just one threat. For instance, putting all your money into semi's or mags right now.

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    4. "everything is VULNERABLE". Sorry, no coffee yet this morning

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  3. “You can’t eat gold, nor can you eat currency.  But you also can’t survive in today’s world without some gold or cash.”



    I've given this a lot of thought James, and as long as I have some 30 odd years (Roughly the number of years that I have left if I'm lucky) of wheat, beans, rice, other storable foods, and thrift store clothes, technically, I could live out the rest of my years with only enough currency to pay my property taxes. It wouldn't be much fun, and by the end, I will have read every book in my library multiple times, but it would be doable, unless of course the government imposes additional taxes on living.

    But basically, that's my bare minimum plan. Enough for property taxes with a little extra, and the rest in preps.

    On another related note, have you noticed just how much wool shirts have gone up over the years? I remember when I was a younger guy in the 80's, you could pick up top brands for $40 all day long. Now some of you might be saying that $40 was a lot of money in the 80's. But I don't remember the cringe factor at the price of a $40 shirt then, the same way I do now for the same shirt at over a $100.

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    1. I do a lot of overstocking to a stupid level. When I had a source in the thrift store, back when we got good donations rather than trash because the dump charges a WHOLE $5 for a load, I bought every ugly wool sweater available. I'm talking hideous. You wouldn't wear them to a X-Mas party to win a contest. I have enough wool sweaters for the rest of my life. Apply that to a LOT of consumer items. I couldn't imagine paying full retail for anything.

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    2. Yes, not all wool products are expensive James. You can still get the sweaters cheaper than the shirts for some reason. Also, pants are very reasonable at a thrift store, and they're often 100% wool pants. The only drawback is that they're of the thin dress slack variety, and not the tough as nails outdoors slacks. I got 2 pairs of 100% wool slacks that looked like they were never worn for $7 each, and that I'm sure retailed for $100 new.

      I understand not wanting to pay new for anything, but unfortunately for me, it's tough to find shirts in my size due to my longer than normal arms. I saw a Pendleton wool shirt in the thrift store one time. These shirts are over a $100 new. But of course it was too small for me.

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    3. When I was thin as a rail I could buy slacks at the thrift store. Once my metabolism slowed and I went up waist sizes they no longer carried my size. As if when your gut goes out you are supposed to get shorter. I wonder if wool sweaters are cheaper because it uses a thicker, courses strand rather than a more fine, processed thread?

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    4. I actually had good luck with the thrift stores in my area with the pants sizes, and I have about a 36” to 38” waist. As far as the sweaters go, that's probably a good guess. They're probably easier to manufacture due to their loose weave.

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  4. Ok today you hit the nail on the head on the petro dollar being the biggest threat. But I have said in the past that when it happens "The world will reset with EMP's world wide"now even if that doesn't happen gold and silver isn't cash the government won't accept it. A man with a food surplus has All others by the balls rich or poor.

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    1. I added a comment to today's article too late for prior posting. Kroger, sugar, 5k calories a buck.

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  5. Thin 100% wool pants keep your polypro long underwear from catching fire/getting spark-holes around camp. Thin wool dries faster than thick wool. If it's raining/misty, pull plastic/gore-tex pants over wool, remove after after water stops.

    I've spent a lot of time in misty wet deadly-cool (31-40 F) pnw forests as well as picking the urban yuppie sporty free piles. This week has been great for the stuff, with Burning Man dust!

    pdxr13

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    1. Burning Man. Waste resources to go demonstrate how groovy and Tree Hugger you are. 20 years ago you were invited if you were weird. Not enough money in that, I suppose.

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